The Start-Up Loan Company is designed to help people who are at the very early stages of launching their business. By their very nature, these people tend to be less experienced, and to have more gaps in the knowledge and experience. You may be an excellent kitchen fitter, or a world class lawyer, but that doesn’t necessarily mean you have all the skills to run a business from day one.
In this situation, a business plan fills two needs. Firstly, it gives the business owner a space to write down their aims for the business, as well as the tactics and strategies they’ll employ to get there. This process will help to identify the gaps in their knowledge and experience, and to plan how they will fill those gaps. Secondly, it gives the lender – in this case the Start-Up Loan Company (SULC) – reassurance that the business owner has thought about this, and is not being complacent.
What needs to be in my business plan?
- Business Overview. What will the business do? This section should explain why you think there is a gap in the market for you and your product.
- Objectives. How will you and the business define success? These could be financial or sales targets, or could be related to customer feedback. However, the objectives should always be SMART (Specific, Measurable, Achievable, Relevant and Time bound). So, for example, just saying you want to make loads of money is not a SMART objective. Saying, “We will achieve £5,000 of sales revenue in the first full month of trading,” is.
- People. A lender is deciding whether or not to take a risk on you, not your business. As well as your idea, you have to convince them that the people in the business are worth investing in. You should include detail on the management’s relevant experience and skills.
- Products and Services. What are you selling? Whether it’s a product or a service, every business needs something to sell. Get specific here. Perhaps you could include a price list. How do your prices compare to your competition?
- Market. Who are you selling it to? This is crucial. The most innovative product in the world will not sustain a business if nobody knows about it! Who are your customers? How will you market to them? The more detail here, the better. Some businesses create a separate marketing plan, but certainly a substantial marketing section within the business plan is a must.
- Location. Do you have premises for the business? Will you be working from home? Are the premises appropriate for the business, and have you taken premises costs into account?
- Financial information. The Start-Up Loan Company asks you to provide a twelve month cash flow forecast, and provide a template to do so. However, plugging numbers into the spreadsheet is only half the job. Those numbers have to be credible. You should be able to justify those numbers in some detail. For example, if you are forecasting £5,000 of sales revenue in the first full month of trading, then where has that number come from? You might have estimated footfall in your shop, then you can estimate a conversion rate – what percentage of those people will buy? Then you can estimate an average spend per customer, and thus calculate the total sales forecast. Of course, not every business is a retail outlet, but there should always be some level of thought behind your forecasts, rather than just plucking a figure out of the air.
Most important, don’t panic. If you are a brand new business applying for a start-up loan, then SULC is not going to expect the same detail in your plan than a bank would expect from a multi-million pound business. SULC doesn’t expect you to be Richard Branson, but they do expect you to have given this some thought, and the business plan is your way of collecting those thoughts in one place and showing the lender that you’re serious.
You can find out more about the Start-up Loan Company Here.
Start your business today by downloading your free start-up guide!
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